The Capital Market Authority (“CMA's") Board has approved the largest set of regulatory enhancements ever made in the sukuk and debt instruments market since its launch in Saudi Arabia. These changes include amendments to the provisions of the Rules on the Offer of Securities and Continuing Obligations related to the issuance of debt instruments, which involve easing the prospectus requirements for different categories of offerings (public, private, and exempted offerings), which will take effect upon their publication.
The approved amendments aim to develop the regulatory framework for offering debt instruments in Saudi Arabia, contributing to attracting a wider range of issuers and enhancing the depth and investment in the sukuk and debt market.
The amendments approved by the CMA's Board allow the Kingdom's development funds, development banks, and sovereign funds to issue debt instruments under an exempt offering, according to specified regulations and conditions. This provides flexibility to meet their financing needs through the debt instruments market and supports the national strategic and developmental objectives.
Additionally, the amendments involve easing the requirements for preparing a prospectus for public offerings and simplifying the supporting documents for debt instruments by over 50% compared to the current requirements. Furthermore, the amendments have improved the rules related to public offerings by dedicating a separate section for the regulations governing such offerings, enhancing clarity regarding the regulatory requirements for issuing sukuk and debt instruments while ensuring investor protection by disclosing all material information.
As for private offerings, the CMA has abolished the requirement for a time period notification before commencing the offering process. According to the approved amendment, local issuers can now notify the CMA and immediately begin the offering process, catering to companies' needs. This change is expected to enhance the efficiency of the notification process and expedite issuers' access to financing through the sukuk and debt market.
These amendments are part of the ongoing development of the sukuk and debt market, aiming to stimulate sukuk and debt issuances to meet companies' financing needs and diversify their funding sources. This, in turn, will positively contribute to the growth of the national economy and further activate the sukuk and debt market as one of the primary channels for financing businesses and the economy.
The approval of the Amendments came following the CMA's publication of the draft of “The Proposed Regulatory Enhancements for the Offering of Debt Instruments" on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated to the National Competitiveness Center and the CMA's website for public consultation for a period of (30) calendar days.
The Rules on the Offer of Securities and Continuing Obligations can be found at the following link:
RULES ON THE OFFER OF SECURITIES AND CONTINUING OBLIGATIONS
